The U.S. Supreme Court, on the last day of its current term, has now had the final say in the Obama Administration’s recess appointments controversy involving Noel Canning, a bottler of Pepsi-Cola products, and the National Labor Relations Board (“NLRB”). The Court unanimously sided with the D.C. Circuit Court of Appeals in concluding that the Obama Administration’s appointment of three of the five NLRB members in January 2012 during a purported Congressional “recess” violated the Recess Appointments Clause of the United States Constitution because the Senate was not actually in “recess” at the time. As a result, the President’s three January 2012 appointments were invalid and the NLRB therefore lacked a quorum to act on cases before it during the 18 month period between January 2012 and July 2013 when the Senate voted to confirm a 5-member NLRB.
For employers, the constitutional details of what is, and is not, a lawful recess appointment set forth in the Court’s opinion are less important than the effect of the decision on cases decided by the NLRB during the 18-month period when it was improperly constituted. During that time, the NLRB issued controversial decisions which protect employees who criticize their employers on social media, invalidate class action waivers in arbitration agreements, prohibit confidentiality in internal investigations, and invalidate common at-will employment disclaimers in employee handbooks. Those decisions rendered by an unconstitutionally appointed NLRB are now themselves invalid. The respite for employers, however, is likely to be short-lived given the ambitious employee and union-friendly agenda that the NLRB continues to pursue since July 2013 with a lawfully constituted 5-member NLRB. Additionally, there is nothing to prevent the NLRB from reaching the same conclusions a second time around.
Meanwhile, a press release issued by NLRB Chairman Mark Gaston Pearce today stated that the NLRB is analyzing the effect of the Supreme Court’s decision on the cases decided by January 2012 recess appointees and is committed to resolving any cases affected by the decision as expeditiously as possible. Employers will therefore have to wait and see what the NLRB’s next move in the saga will be.
We will continue to update you on these and other important developments in labor and employment law. If you would like further information, please contact Jayne Benz Chipman at 415.835.9013 or by email at jchipman@HKemploymentlaw.com or Monte Grix at 310.255.1827 or by email at mgrix@HKemploymentlaw.com.